2019 Tax Deadlines for Small Businesses

Keep this chart handy or copy it into your calendar so you won’t miss a due date throughout the year.

W-2 Filing

(Wage and Tax Statement for Full- and Part-Time Employees)

January 31

Form 1099-MISC Filing

(Statement of Payments Made to Independent Contractors)

January 31  Copy A to the IRS if box 7 (non-employee compensation) is filled in

February 15  Copy B to the contractor

February 28  Copy A paper submission if box 7 is empty

April 1  Copy B electronic submission if box 7 is empty

S Corporation Tax Filing

March 15  Submit Form 1120S Income Tax Return

March 15  File for an extension

Partnership Tax Filing

March 15  Submit Form 1065 Income Tax Return

March 15  File for an extension

C Corporation Tax Filing

April 15  Submit Form 1120 Income Tax Return

April 15  File Form 7004 Application for an Automatic Extension of Time

LLC Filing as Corporation Tax Filing

April 15  Submit Form 1120 Income Tax Return

April 15  File Form 7004 Application for an Automatic Extension of Time

Individual Tax Filing

(Sole Proprietor, Independent Contractor)

April 15  Submit Form 1040, 1040A or 1040EZ Income Tax Return

April 15  File for an extension

Estimated Quarterly Tax Payments

January 15  Send final 2018 payment with Form 1040-ES Payment Voucher 4

April 15  Send first 2019 payment with Form 1040-ES Payment Voucher 1

June 17  Send second 2019 payment with Form 1040-ES Payment Voucher 2

September 16  Send third 2019 payment with Form 1040-ES Payment Voucher 3

 

Some types of businesses may have additional deadlines and requirements. Consult with your accountant or tax advisor early in the year to make sure you meet your obligations.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

How To File Tax Forms as a First-Time Business Owner

You’re new to the world of entrepreneurship, taxes are one of the things you need to learn about, fast. Not to worry, help is at hand. Here’s our handy guide to the forms you’ll need, both for yourself and your employees.

Income Reporting for Yourself

The form you use to file an annual income tax return depends on your type of business entity. For example:

• Form 1040 for sole proprietors

• Form 1120 or 1120-S for corporations

• Form 1065 or 1065-B for multiple-member LLCs and partnerships

Tax Payments for Yourself

Most small businesses pay estimated quarterly taxes throughout the year. One of these forms should accompany each payment:

• Form 1040-ES for individuals including sole proprietors, partners and S-Corporation shareholders

• Child care and education costs

• Form 1120-W for corporations

In addition, you must pay self-employment tax, which covers your social security and Medicare taxes. This tax is included on Form 1040.

Income Reporting for Employees

Anyone you pay to do work for your business must have their earnings reported to the IRS. Send in one of these forms for each individual:

• W-2 for employees

• 1099 for independent contractors

Tax Payments for Employees

You must deduct some taxes from your employees’ paychecks, and then pay those taxes to the government. They include social security, Medicare, federal income tax withholding and federal unemployment tax.

The accompanying form will be one of the “94-series,” depending on your specific business, such as Form 940, 941, 943, 944 or 945.

You don’t have to make any tax payments for independent contractors.

Excise Tax

Certain types of business — such as manufacturers or sellers of heavy equipment, or who conduct a wagering business — must also report excise tax.

• Form 720 for environmental, communications, air transportation and fuel taxes

• Form 2290 for trucks, tractors and buses used on public highways

• Form 11-C for wagering activity (use Form 730 to figure the amount)

Expenses

There’s a whole array of deductions you can take as a business owner in order to decrease your tax burden. Be sure to keep expense records and receipts so you don’t miss out. Report on Form 1040, 1120 or 1120-S:

• Costs of raw materials and labor

• Capital expenses (purchase of equipment and other start-up costs)

• Interest on business mortgages, loans and credit cards

• Personal expenses such as a home office and business travel

As a new business owner, all this info may seem overwhelmingly complicated. To be sure you get it right the first time, consider using a professional tax service or CPA (Certified Public Accountant) who is knowledgeable about the tax requirements governing small businesses.

At Xendoo, working with small businesses is our specialty. We understand your concerns and needs, from getting your books ready to finding opportunities to reduce your taxes. Best of all, we understand you can’t afford to pay an arm and a leg for accounting expertise. Check out our affordable rates today.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

How to Pay Yourself When You’re the SMB Owner

It’s all too easy to dip into the company’s bank account as and when you need to. But there are many good reasons to put yourself on a fixed salary, including simplifying your tax return, protecting yourself from the company’s debt liability, and giving yourself the peace of mind of a regular income.

Here’s how to figure out how much you should pay yourself.

Give Yourself “Reasonable Compensation”

Taking out big chunks of money will raise eyebrows at the IRS. On the other hand, don’t go so low that you cause yourself financial and emotional stress.

Reasonable compensation is how much you would have to pay someone else to do your job. The answer to that question depends on your industry, location and other factors. An hour or so of internet research or talking to your industry peers can help you hone in on:
• What recruitment ads are offering for similar positions
• If your pay is commensurate with your duties and responsibilities
• If your pay seems reasonable compared with your employee’s wages
• If your pay seems reasonable for the number of hours you work

Take It Out of Profits, Not Revenues

In other words, deduct all your expenses, such as supplies, taxes, payroll and overhead, from the amount of money coming in first. Whatever’s leftover is what you can draw your salary from.

Good accounting software will do most of the work in figuring all that out.

Don’t Take It If You Can’t Afford It

The company’s current finances may simply not be able to support another salary (yours). For example:
• Your employees haven’t been paid: Giving yourself wages but not them will ruin morale
• The company has a large amount of debt: Likewise, creditors will be unhappy if they don’t get paid first

Check the Legalities

The legal structure of your business might dictate how much — and when — you can pay yourself. For example:
• Sole proprietors usually have no restrictions, because they are not accountable to shareholders
• Corporations usually have the business owner on the payroll, like any other employee

Decide on a Pay Method

How you pay yourself can have a significant effect on your tax liability. There’s so much variation in tax laws and business structures there’s no one right way for every business owner. You might want to consider:

• Straight salary: Simplest but not always the most tax-efficient
• Salary plus dividends: If you own stock or shares in the company, take as much as you can in dividend payments since they’re usually taxed less than salary
• Stock or stock options: also very tax-efficient
• Salary plus annual bonus: If structured right, it can save on taxes
• Business agreement to defer payment: A good option if money is tight, however, it will be registered as a company liability

Need help deciding if, how much, and how to pay yourself? Xendoo’s accounting experts provide easy-to-understand profit & loss statements, tax advice, and tips on improving profitability so you can pay yourself the salary you deserve.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

Taking Stock and Shaping Up For 2019

One of the most popular New Year’s resolutions is to get fit. We say your business should be as buff as your body — and making it happen will be a lot easier on the muscles! Here are 4 areas of your business that should get a fresh look every year, along with tips on how to get them into their best shape ever.

1. Vision & Strategy

When you originally launched your business, you had a vision of what you wanted it to be one day. How does that vision relate to your current reality — is it your future, present, or past? Your answer will guide your strategy for the year ahead.

Your future: You’re still on track towards your goal, you’re still satisfied that it’s the right goal for you, and you believe it is achievable in current conditions. If this is your situation, your main concern is to keep an eye on your market, including new competitors, emerging trends, and the economic situation.

Your present: You’ve reached your goal and your business is now everything you envisioned back on day one. Congratulations! However, you now face the risk of becoming stagnant and falling behind instead of continuing to grow. It might be time for a revised goal and an updated strategy for how to attain it.

Your past: For one reason or another, your original vision no longer applies so well to your business. Your industry, your customers, or your own interests may have taken you in a different direction, maybe without much preparation. Wait no longer to do your groundwork, with a completely new vision statement and business strategy.

If you’re not sure which of these categories is — or should be — yours, it’s time for an outside view. Ask your best customers, expert consultants, or industry colleagues. Research industry trends and insights. This fresh, objective perspective can open your eyes to unrecognized opportunities for success.

2. Marketing & Sales

Once you’ve nailed down your vision and strategy, use them to create your brand identity. The more unique, accurate, and specific your brand and selling points are, the more effective your marketing efforts will be at acquiring new customers and retaining (or upselling) current ones. For example, any fitness studio can say they help people get fit; but only you can say you’re the town’s best authority on HIIT workouts.

Next, analyze how well your marketing channels are driving sales. If a channel (such as direct mail) is performing poorly, figure out why. Is it the wrong channel for reaching your prospects (who are looking online, not reading snail mail)? Is it the wrong channel for your message (such as a postcard crammed with too many words and images)? Fix or eliminate the losers and put your marketing budget into the winners.

3. Operations

Your business and your industry have evolved since you first opened your doors. Have your workflow processes, equipment, and employees evolved along with you? Or are they now struggling to meet demands they weren’t designed for?

This is the biggest opportunity for significantly improving efficiency and performance — and your bottom line. It also quite often requires an initial investment, whether in new tools, new software, new hires or additional staff training. A bit of cost-benefit analysis should show you whether it will be a smart move in the long run.

4. Finance

We know, it’s not your favorite thing to think or talk about. But it really is essential for business owners to know the state of their financial health, so they can make the right decisions at the right time. Questions to ask yourself include:

  • How often do I receive financial reports, and how current are they?
  • How long does it take my accountant to respond to my call?
  • Does my accountant provide me with insights for planning and growth?
  • Does my accountant spot ways that my business could run more cost-effectively?
  • How much of a hassle is it for me to do payroll and file taxes?

At Xendoo, we understand small businesses and the need for lightning-fast responses to ever-changing environments. Your dedicated team of accounting experts can help get your business into shape for the new year — and keep it that way, day after day,

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

Using Freelancers? Here’s How to Report Their Earnings

There’s a major shift in how America works going on. More and more people, in all industries and of all skill levels, are working as independent contractors rather than in traditional full-time jobs. By 2027, more than 50% of the entire workforce will be freelancing.

That means, if your business isn’t already using freelancers, chances are it will be doing so in the near future. It also means you need to know how to report their income — something that the IRS (which is well aware of this trend) is increasingly concerned with.

The 1099 Form

This is the form you send to the independent contractor and the IRS every year to report their earnings. It’s essentially the equivalent of Form W-2 for employees.

There are several types of 1099 forms. The one most commonly used by small businesses is Form 1099-Misc.

Who Qualifies as an Independent Contractor

Any individual or unincorporated business who is not directly in your employ, but rather hired on a contract basis to perform work, is an independent contractor. Unlike an employee, they are completely free to arrange their financial and work-life as they see fit. Typical freelance roles include website developer, photographer, social media consultant, and data processor.

Be aware that misclassifying an employee as an independent contractor will incur serious penalties from the IRS and state income tax authorities. To see what could happen, you need to look no further than the huge lawsuit California won against Uber in 2015, claiming that Uber drivers were employees, not independent contractors.

The second qualification is that you paid $600 or more during the tax year. That payment could be in the form of cash, rent, exchange of services, prizes and awards, and just about anything else that has a monetary value.

Who Doesn’t Need a 1099

Payments to C-corporations and S-corporations are not reported on Form 1099. You can tell if they’re incorporated by looking at the Form W-9 you had them fill out when you first hired them. (You did do that, right?)

Freelancers hired through a third-party service may not need a 1099 if they are considered employees of the service (similar to the Uber situation). For example, freelancers hired through Upwork are paid by Upwork, after you pay Upwork for their services. Make sure you understand the tax filing status of each service you use before you get into a contract.

How to File a 1099-Misc

Fill in the required information (which is on Form W-9 mentioned above):
• Contractor’s legal name
• Contractor’s address
• Contractor’s taxpayer identification number (or social security number if they are a sole proprietor)

1. Check your bookkeeping records for the total amount you paid them during the tax year, and fill it in on the form.

2. Submit Copy A to the IRS by January 31, 2019, either by mailing a physical copy or sending it electronically.

3. Send Copy B to the independent contractor by February 15, 2019. You can mail a physical copy or send it electronically; but if you choose the latter, you must have the contractor’s consent and a verified method of transfer, such as an email address.

5A — for physical filing. Complete and submit Form 1096 (used for paperwork tracking) to the IRS by January 31, 2018. For electronic filing, this step is not necessary.

5B — for electronic filing. Obtain a Transmitter Control Code (TCC) by filling out Form 4419 and mailing or faxing it to the IRS at least 30 days before the deadline for submitting Form 1099-Misc.

State Income Reporting.

If the state where your business is based collects income tax, you may have to file 1099s with them as well. Check with the state’s tax authority for regulations and filing deadlines.

An Easier Way.

If this is all sounding like a lot of work, a great solution is to have an accounting service, such as Xendoo, do it for you. We’ll keep all of the necessary records and make sure the right forms get filed at the right time.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

How to Do Estimated Tax Payments for Small Business

If you’re a sole proprietor, LLC owner, or partner, you need to know about quarterly estimated tax payments. That’s because you pay both your business and personal income tax through one personal tax return, so you are subject to the rules governing anyone who is not an employee of someone else’s business.

Employees have payroll taxes withheld from their paychecks throughout the year, so the government always has money coming in. You’re not receiving a paycheck from another company, so the government gets nothing until you write them a check. Hence the estimated quarterly tax payment system.

Under this system, you pay a portion of your taxes every quarter: in January, April, June, and September. That amount must include self-employment tax (Social Security and Medicare taxes) as well as income tax.

IRS Form 1040-ES

This is the form used for filing an estimated income tax. You will send one along with each tax payment you mail.

Exception

You don’t need to pay estimated tax if you had no tax liability for the previous year, you were a U.S. citizen or resident for the whole year, and your prior tax year covered a 12-month period.

Decide on a Percentage

The IRS requires that the total of those four payments be “at least 90% of the tax for the current year, or 100% of the tax shown on the return for the previous year, whichever is smaller.”

Depending on your situation, it may be smarter to pay more than 90%, rather than risk underpayment penalties.
• Pay 90% if you expect your income this year to be less than last year
• Pay 100% if you expect your income this year to be the same or more than last year
• Pay 110% if last year’s adjusted gross income was more than $150,000 ($75,000 if you were married and filed a separate return)

Estimate Your Income

A good starting point is your income tax returns for the last two or three years.

If this is your first year in business, or you expect income to be significantly different from previous years, start with your year-to-date income and project it to a total for the year.

Remember, this estimate must also include other personal income such as interest, dividends, capital gains (i.e. from the sale of stocks or other assets), and taxable alimony.

Calculate Your Tax

Form 1040-ES includes a worksheet for calculating the quarterly tax payment. You’ll fill in your estimated income as well as any credits and deductions you’re entitled to. It also offers help with figuring the differences between last year’s and this year’s income.

Plan a Payment Schedule

You’re required to complete the quarter’s payment by the IRS’s mandated dates. However, you don’t have to send it all in a lump sum. You may choose to make weekly, biweekly, or monthly payments if that works better with your cash flow.

You can also choose to pay your estimated tax for the entire year in one lump sum by April 15 of the current year. (You will still have to file a tax return next April with the actual figures for the year, and either make an additional payment or receive a refund depending on the difference between your estimated and actual tax.)

Also, there’s no rule that you have to divide the tax equally between the quarterly payments. If you typically do most of your business in the 4th quarter, it would be easier to determine a smaller amount for the first three payments, and a larger amount for the last one.

We hope you’ve found this overview helpful. However, it is not intended to be specific tax advice. Please work with your Xendoo tax professional to decide on the best tax strategy for you and your business.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

W-2 or 1099: How Should You Report Your Workers’ Earnings?

Tax season has rolled around again — time to send your workers’ earnings reports to the IRS and the workers themselves. Which workers get which forms? Here’s what you need to know.

Employee or Independent Contractor

• Use a W-2 for workers in your full- or part-time employment.
• Use a 1099-Misc for freelancers and independent contractors.

Who Qualifies as an Employee

According to the ITS, the worker’s job situation must meet the following criteria:
• Has hours or a set schedule assigned by you, the employer
• Gets trained by the company in a certain method
• Completes any and all work assigned to them by the employer
• Is provided the tools and materials necessary to do the work
• Has only one employer (usually)

Who Qualifies as an Independent Contractor

These workers are in business for themselves and contracted by you on a project basis.

Independent Contractors:
• Set their own schedule.
• Use their own personal method for doing the work
• Accept tasks on a case-by-case basis and can turn down offers of work
• Supply their own tools
• Have more than one client

It’s not necessary to meet every qualification on the list to be classified as an employee or an independent contractor, but there should only be one or two exceptions.

How Taxes Are Collected

• For W-2 employees, you deduct payroll taxes from their paycheck and pay those taxes to the government.
• For 1099-Misc contractors, they are responsible for calculating and paying their income tax.

Minimum Earnings Reportable

• For W-2 employees, there is no minimum. All wages, salaries and tips, no matter how small, must be reported.
• For 1099-Misc contractors, the minimum is $600 total for the year. If you paid them less than that, you don’t need to send 1099.

When 1099s and W-2s Are Due

• W-2 forms must be filed with the IRS and received by the employee no later than January 31.
• 1099-Misc forms must be filed with the IRS by January 31 and received by the contractor no later than February 15.

In some cases, such as having more than 250 W-2 forms to file, you may be required to file electronically. If you have questions about this or any other aspect of tax reporting, your Xendoo tax expert is there to help you sail through the paperwork.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

Organize Your Income Tax Forms Once and for All

Want an easy way to make tax time less stressful? Have all your documents organized, accessible, and easy to find all year round. When you sit down to fill out the return, all you have to do is plug in the numbers that are already at your fingertips.

Once upon a time, staying organized meant dealing with many bits of paper: adding them up, filing them, and trying to find them again later. Now, a cloud storage solution can eliminate all those hassles.

Xendoo offers its clients cloud storage space for uploading documents and sorting them by year. Looking at an online menu is a lot easier than digging through filing cabinets. Plus, it’s accessible from a computer or smartphone anytime, anywhere.

Go Paperless today ->

Business Tax Forms Checklist

Here are some of the most common documents small business owners need to complete their income tax returns. Proof of income, such as Form 1099 or W2


 Proof of previously paid taxes, such as estimated quarterly tax
 Receipts for deductible business expenses such as telephone/ISP charges, travel expenses, professional and legal fees
 Receipts for deductible capital expenditures
 Receipts for depreciating equipment
 Deductible salaries and benefits paid to employees
 Receipts for home office expenses such as repairs and utilities
 Interest paid on mortgages, business loans, education loans, and business credit cards
 Property insurance premiums
 Receipts for charitable contributions

Personal Tax Forms Checklist

If your business is registered as a sole proprietorship, partnership, or limited liability company (LLC), you’ll probably use one return to report both business and personal income. Some of the items above can also be deducted from your personal income, such as mortgage interest and charitable contributions. In addition, you may be able to claim:


 Homebuyer tax credits
 Child care and education costs
 Medical expenses (if high enough to be worth itemizing)

 

Imagine having all this information just a click away. That’s how cloud storage saves you time and effort, not only in preparing this year’s income tax return but also in checking and comparing the data from previous years’ returns.

If you’re not sure which small business tax forms you need or want help clarifying your tax situation, don’t hesitate to contact a Xendoo tax expert. Along with professional advice, we’ll give you the peace of mind that comes with filing an on-time, error-free return. And that’s priceless!

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.